Regulatory T (Treg) cells, whose differentiation and function are controlled by X chromosome-encoded transcription factor Foxp3, are generated in the thymus (tTreg) and extrathymically (peripheral, pTreg), and their deficiency results in fatal autoimmunity. Here, we demonstrate that a Foxp3 enhancer, conserved noncoding sequence 1 (CNS1), essential for pTreg but dispensable for tTreg cell generation, is present only in placental mammals. CNS1 is largely composed of mammalian-wide interspersed repeats (MIR) that have undergone retrotransposition during early mammalian radiation. During pregnancy, pTreg cells specific to a model paternal alloantigen were generated in a CNS1-dependent manner and accumulated in the placenta. Furthermore, when mated with allogeneic, but not syngeneic, males, CNS1-deficient females showed increased fetal resorption accompanied by increased immune cell infiltration and defective remodeling of spiral arteries. Our results suggest that, during evolution, a CNS1-dependent mechanism of extrathymic differentiation of Treg cells emerged in placental animals to enforce maternal-fetal tolerance. Copyright © 2012 Elsevier Inc. All rights reserved.